Dow Closes Higher, Corporate Earnings Eyed

The blue chips shed steep losses and ended the day modestly in the green as optimism over corporate earnings outweighed a disappointing jobless claims report.

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Today's Markets

The Dow Jones Industrial Average gained 14.2 points, or 0.12%, to 12,285, the S&P 500 was up 0.11 point, or 0.01%, to 1,315 and the Nasdaq Composite slipped 1.3 points, or 0.05%, to 2,760. The FOX 50 was down 1.3 points to 924.

The Dow was lower by nearly 100 points in early trading, but the markets changed course by mid-day on hopes big companies would report solid first-quarter results. However, Google (NASDAQ:GOOG) posted profits that missed analysts' expectations after the close the bell Thursday. Shares of the search-heavyweight were off by as much as 4% in after-hours trading.

Consumer discretionary issues like Kraft Foods (NYSE:KFT) and Coca-Cola (NYSE:KO) were among top performers for a second-straight day. Financial issues such as JPMorgan Chase (NYSE:JPM) and Goldman Sachs (NYSE:GS) suffered amid concerns tightening scrutiny of lending practices would cut their bottom-line.

The markets can be particularly volatile as traders parse through the deluge of earnings that are slated to be released in coming weeks, said Marc Pado, U.S. market strategist at Cantor Fitzgerald.

Weekly claims for unemployment benefits unexpectedly jumped to 412,000 in the prior week from an adjusted 385,000 the week before -- far below the 380,000 economists were expecting. The four-week-moving-average, which mitigates some volatility, increased 5,500 to 395,750 for the week. Generally, economists see readings under 400,000 to signal moderate recovery in the labor market.

"While the labor market is improving, the pace remains lumpy and sustainable traction remains difficult to achieve," wrote Peter Boockvar, managing director at Miller Tabak + Co. in a research note.

The producer price index, which measures inflation at the wholesale level, jumped 5.8% on a year-over-year basis, slightly lower than the 6.2% pace economists forecast. Nearly all of the increase was due to soaring energy prices. Excluding volatile food and energy prices, the so-called core-PPI was up 1.9%.

"This was a strong report, providing further evidence that recent gains in oil and commodity prices are putting upward pressure on a goods prices beyond energy and food," wrote Peter Newland, an economist at Barclays Capital, in a research note.

Inflation has been a major focus of economists and policymakers alike in recent weeks. The Federal Reserve has embarked on a highly-expansionary monetary policy regime -- including record-low interest rates and asset purchasing -- in a bid to jump-start the economy. The downside of accommodative monetary policy, economists say, is the chance that it will spur long-term inflation.

Fed officials have said they believe the current rise in food and energy prices a short-run phenomenon caused by a run-up in prices in the financial markets that was fueled by fears of a supply disruption in the energy markets.

However, they have differed over how long to continue the central bank's asset-buying program, with some fearing it has already started to cause a rise in inflation.

On the corporate front, the Senate Permanent Subcommittee on Investigations slammed Goldman Sachs (NYSE:GS) for misleading clients regarding mortgage-backed assets during the financial crisis. The 629-page report filed by the committee said Goldman sold mortgage-backed securities to clients while maintaining bets that they would lose value, creating a conflict of interest.

"In my judgment, Goldman clearly misled their clients and they misled Congress," said Carl Levin, chairman of the Senate Permanent Subcommittee on Investigations.

Computer sales slid 1.1% in the first quarter, according to research consultant Gartner -- the first drop since 2009. PC-makers such as Hewlett-Packard (NYSE:HPQ) and chip-makers like Intel (NASDAQ:INTC) were under pressure after the report.

In energy markets, oil prices have pulled back considerably this week, but still remain more than 25% higher than their lowest settlement price in 2011.

Light, sweet crude recently traded higher by 99 cents, or 0.92%, to $108.70 a barrel. Gasoline prices at the consumer level continue creeping higher. A gallon of regular gas cost $3.81 on average nationwide, up from $3.56 last month and $2.86 last year, according to the AAA Fuel Gauge Report.

Gold climbed $16.80, or 1.15%, to $1,472 a troy ounce.

The U.S. dollar lost 0.35% against a basket of world currencies and the euro gained 0.37% against the greenback. The greenback had been trading higher, but slipped into the red after the disappointing jobless claims numbers.